Oli Scarff/Getty Images News
BP (New York Stock Exchange:BP) The surprise announcement that it has lowered climate targets and now plans to produce more oil and gas for longer has angered climate-focused investors, but the company’s share price has it gained 19% in the four days since the news, hitting its best levels in nearly four years.
“The decision that BP has taken is regrettable, [taking] Bearing in mind that the targets were approved by investors at the last annual meeting,” said Angela Quiroga, ESG and environmental analyst for shareholder BP Union Investment.
Last May, BP (BP) won shareholder support for its strategy to cut hydrocarbon production by 40% by 2030 from 2019 levels; last Tuesday, BP said it now plans a 25% cut, although it did not change its long-term ambition to reduce emissions to net zero by 2050, and remains committed to using 50% of its spending budget on low-carbon businesses. carbon by 2030.
Changes in the world, from the voracious consumption of fossil fuels that arose from the pandemic to the disruptions caused by the Ukraine war, show that the much-touted energy transition is more complicated than first imagined, the CEO said. of BP (BP), Bernard Looney. The Wall Street Journal In an interview.
“If you sat in any meeting in Europe in the 2019 term and talked about energy, there was a conversation: It was about energy emissions,” Looney said. wsj. “Today, behind a pandemic, behind a war, behind a cost of living crisis, behind an energy crisis, [it] It’s changed to a much more balanced conversation.”
BP’s (BP) pivot is also the simple result of oil prices forecast to be unexpectedly higher for longer; as RBC Capital’s Biraj Borkhataria put it: “It’s better to talk about oil when it’s at $80 a barrel than at $40.”
BP is not alone: Earlier this month, Shell (SHEL) chief executive Wael Sawan said his company would increase its natural gas business as a source of revenue and would be cautious about increasing spending on renewables.
“We cannot justify going underperform,” Sawan said on Shell’s post-earnings conference call after reporting a record profit for 2022.